MaxedOutMama
Tuesday, May 20, 2008
Twas A Dark And Rainy Day
Ughh. The news about Kennedy brought back some highly unpleasant memories, because I have had several people in my family die of gliomas. I will definitely be keeping them in my prayers.
It seems that this election year is just bound to heap unpleasantness upon unpleasantness. Well, maybe this will be a reminder to us all that there are people involved. Yes, flawed people and imperfect people, but PEOPLE. Human beings. People must always be taken seriously. People put the light into the world for us, and some few become vicious destroyers of that light for reasons which we really do not understand.
I am also praying for Viola's family members. Her aunt had just gotten remarried about a year ago to a man who had lost his wife four years previously. That left him with three motherless daughters. One may guess that it was a great relief when Viola's aunt and he met and joined their lives. Very suddenly, this gentleman died leaving the entire extended family in shock and leaving those three daughters, who have now lost both their parents, in deep shock. Viola says they are not doing well. Your prayers would be appreciated.
It seems that this election year is just bound to heap unpleasantness upon unpleasantness. Well, maybe this will be a reminder to us all that there are people involved. Yes, flawed people and imperfect people, but PEOPLE. Human beings. People must always be taken seriously. People put the light into the world for us, and some few become vicious destroyers of that light for reasons which we really do not understand.
I am also praying for Viola's family members. Her aunt had just gotten remarried about a year ago to a man who had lost his wife four years previously. That left him with three motherless daughters. One may guess that it was a great relief when Viola's aunt and he met and joined their lives. Very suddenly, this gentleman died leaving the entire extended family in shock and leaving those three daughters, who have now lost both their parents, in deep shock. Viola says they are not doing well. Your prayers would be appreciated.
Monday, May 19, 2008
Magic Muni Munificence
The Supreme Court finally issued the muni ruling, which allows states to tax income from the muni bonds of other states while exempting their own bonds. This will be very good for munis in some states!!! Bloomberg article.
One thing to note is that the SC didn't address taxation of non-government bonds, which are sometimes issued under state imprimatur by a private venture the state wants to lure (a manufacturer, a sports team). The reasoning used to excuse government bonds from the Commerce clause here might not hold for such bonds:
This is a very important ruling. Consider, for example, California. It has a high state income tax, and therefore a big advantage in marketing muni bonds to local residents. California is not the most creditworthy state by a long shot, and some of its municipalities are in deep fiscal trouble. Therefore if government issues had to compete with bonds across the nation, many issues would probably have to increase the rates paid in order to compete with bonds of other states. A state with a lower tax rate has less comparative advantage internally.
One thing to note is that the SC didn't address taxation of non-government bonds, which are sometimes issued under state imprimatur by a private venture the state wants to lure (a manufacturer, a sports team). The reasoning used to excuse government bonds from the Commerce clause here might not hold for such bonds:
The logic that a government function is not susceptible to standard dormant Commerce Clause scrutiny because it is likely motivated by legitimate objectives distinct from simple economic protectionism applies with even greater force to laws favoring a State’s municipal bonds, since issuing debt securities to pay for public projects is a quintessentially public function, with a venerable history.The actual ruling (55 pages) as published on the SC website. Kennedy dissented, joined by Alito, and Kennedy's dissent is scathing, but the overall majority was 7-2.
This is a very important ruling. Consider, for example, California. It has a high state income tax, and therefore a big advantage in marketing muni bonds to local residents. California is not the most creditworthy state by a long shot, and some of its municipalities are in deep fiscal trouble. Therefore if government issues had to compete with bonds across the nation, many issues would probably have to increase the rates paid in order to compete with bonds of other states. A state with a lower tax rate has less comparative advantage internally.
The Future
You rarely see anyone discuss the JOLTS (Job Openings and Labor Turnover Survey), but does prove useful. Jolts measures job openings and job departures. As you might guess, in bad job markets employees tend to leave jobs less, so both tend to turn down together. While JOLTS hasn't varied much recently, there has been a notable slackening beginning in 2007:
There's lots more data at the survey. According to rail data, we should have a sharper downturn coming along at almost any time in wholesale and retail. Trucking data confirms this theory.
Therefore I do not believe that the emerging economic consensus for a slow improvement in the economy is correct. Gas and diesel prices are exerting an inexorable downward pressure on disposable incomes, and the consumer side of the economy will trend downward, placing further pressure on employment.
Furthermore, the weakening in German and Japanese exports is not a good sign for US manufacturers. US currency is giving a competitive edge to domestic producers, but it is an edge for what seems to be a declining market.
I have written somewhat about the Indian situation, and their economy seems to me to be in considerable travail, and I am not the only individual with these concerns, although the debate rages. But the major problem affecting the Indian economy is likely to stem from infrastructure pressures. It is quite significant that their energy companies want to cap LPG quotas to existing customers and limit new connections in order to stem their losses. In another move, energy companies are trying to bypass their losses on price-controlled motor fuels by ceasing to provide them and substituting their brands, which are not price-controlled.
I cannot believe that current energy price trends can last much longer without inflicting a severe blow on international trade. India is a relatively strong economy and an economy with significant domestic energy production, so I take it as a middle Asian case. Yet inflation is soaring, its currency is depreciating, and costs to consumers are unlikely to be curbed.
In such an environment, imposing a carbon cap and trade scheme could inflict a severe blow on world trade. The price controls and subsidies so common in Asian countries come along with energy inefficiency, and such schemes will end up being a massive tariff. Both McCain and Obama seem now to be supporting policies which are extremely economically risky. The US is dependent on growing demand in other countries just as those other countries depend on our consumption.
The job openings rate remained essentially flat from August 2006 through September 2007 then began trending downward; the rate in March was at the lowest point since mid-2005. The hires rate has had an overall downward trend since July 2006, and has reached the lowest level since early 2004. The separations rate has had an overall downward trend since November 2006. (See tables 1, 2, and 3.)There has been an obvious change in private hiring:
Over the year, the job openings rate (not seasonally adjusted) rose significantly only for federal government. The rate fell over the year for total nonfarm (to 2.7 percent) and total private (2.9 percent) as well as in several industries, including construction (1.4 percent); durable goods manufacturing (1.8 percent); wholesale trade (2.2 percent); transportation, warehousing, and utilities (1.9 percent); information (1.7 percent); and finance and insurance (2.7 percent). Two industries--wholesale trade and information--have experienced exceptionally steep declines in the job openings rate over the past year. The job openings rate for whole-sale trade fell from 3.8 percent in March 2007 to 2.2 percent in March 2008; the rate for information fell from 4.5 percent in March 2007 to 1.7 percent in March 2008.Regionally, the job openings rate fell over the year in the Northeast (2.3 percent) and in the South (2.8 percent).The wholesale trade trend is because retail margins are very tight and volumes are dropping. As I kept explaining last year, the volume trends in shipping are most related to employment in trade & transport. The explosion of banking and lending businesses had accounted for many information openings during recent years, and therefore it's no surprise that this industry would be affected.
There's lots more data at the survey. According to rail data, we should have a sharper downturn coming along at almost any time in wholesale and retail. Trucking data confirms this theory.
Therefore I do not believe that the emerging economic consensus for a slow improvement in the economy is correct. Gas and diesel prices are exerting an inexorable downward pressure on disposable incomes, and the consumer side of the economy will trend downward, placing further pressure on employment.
Furthermore, the weakening in German and Japanese exports is not a good sign for US manufacturers. US currency is giving a competitive edge to domestic producers, but it is an edge for what seems to be a declining market.
I have written somewhat about the Indian situation, and their economy seems to me to be in considerable travail, and I am not the only individual with these concerns, although the debate rages. But the major problem affecting the Indian economy is likely to stem from infrastructure pressures. It is quite significant that their energy companies want to cap LPG quotas to existing customers and limit new connections in order to stem their losses. In another move, energy companies are trying to bypass their losses on price-controlled motor fuels by ceasing to provide them and substituting their brands, which are not price-controlled.
I cannot believe that current energy price trends can last much longer without inflicting a severe blow on international trade. India is a relatively strong economy and an economy with significant domestic energy production, so I take it as a middle Asian case. Yet inflation is soaring, its currency is depreciating, and costs to consumers are unlikely to be curbed.
In such an environment, imposing a carbon cap and trade scheme could inflict a severe blow on world trade. The price controls and subsidies so common in Asian countries come along with energy inefficiency, and such schemes will end up being a massive tariff. Both McCain and Obama seem now to be supporting policies which are extremely economically risky. The US is dependent on growing demand in other countries just as those other countries depend on our consumption.
Thursday, May 15, 2008
US Domestic
Empire State Index stalled out:
Initial Claims, while not dire, are still increasing on a seasonally adjusted (SA) basis. On an NSA basis they continue to decline. The same pattern holds true for continuing claims, which dropped over 123,000 for May 3rd (continuing claims run a week behind initial claims). The level of claims is consistent with recession. To understand the impact, compare May 3rd's continuing claims this year (2,833,473 NSA) to the comparable week in 2007 (2,290,364), or a YoY increase of 23.7%. Needless to say this does not help the economy. It equates to an NSA insured employment increase of 0.4%, which is significant.
One of the weaknesses of measuring insured employment is that after six months unemployed individuals drop off the rolls.
Although May treasury receipts could recover, the deposit pattern for FUT (Federal Unemployment Tax) compared to May 2007 is markedly worse. I did expect to see this, but not quite as emphatically. As we move into the spring and summer months building is at its height and therefore the change in employment indicators should be emphasized for this period.
April G.17: Industrial production dropped 0.7, and the numbers look very similar to February. Of most concern is the 1.1% drop in business equipment. That is a very bad sign, and markedly worse than February. Based on that figure, one might suspect that Q2 GDP will be negative. On a YoY basis, industrial production has managed to climb 0.2%. Hardly strong. The positive subcategories on a YoY basis are business equipment (3.0), materials (1.3), mining (3.1), and utilities (.8). And for April the changes were business equipment (-1.1), materials (-.7), mining (-.8), and utilities (+.3).
Capacity utilization dropped to 79.7. Compare that to the lows for the previous two recessions, which were 78.6 for 91 and 73.6 for 01 (with the bottoms occurring later in those cycles). So the technical economic description of this report should be "piss-poor". April was quite cold, which would have driven up the demand for utilities.
Philly Fed: (the theme is great expectations; note the 2001 pattern)
The effect of the rebate checks on the general economy will probably be muted. I expect utility companies and credit card companies to see better payment patterns and lower delinquencies. I would expect some benefit to the Walmarts of the retailing world, as people who have been avoiding spending on clothing go in and spend on jeans and the like. But consumer psychology is not going to change at these gas and food price levels, so very few will spend most of it in the stores, and continued increases in food and gas prices indicate that the essentials will suck up this money from Washington for the majority of the recipients.
The major story for the US consumer economy over the next six months will be high prices for essentials and much more conservative spending by consumers. Also, the major impact of the home price debacle is due to hit this year. Refinance money usually provides at least a one year cushion for consumer spending, and the restrictions on HELOCs and home equity loans are quite recent. The major tightening on CC standards dates to last fall. Thus we are moving into the period in which 80% of the consumer credit restrictions are due to show up in economic numbers. The Wall Street layoffs are also moving some of the economic impact to a previously immune area with high incomes.
On gas consumption: I have seen estimates of the current drop YoY between 5.8% and 6.0%. However the pattern will accentuate through the year because of the marked drop in construction activity. Also, service businesses aimed at consumers such as home remodeling and lawn maintenance are due to have a tough season. Construction workers drive trucks and transport a lot of materials, so consumption falls should accelerate. The vehicle replacement effect is cumulative over time and will keep building.
One little-discussed aspect of the US economy, especially with respect to employment, is the impact of replacement of illegal workers. I suppose it is simply too politically incorrect to discuss.
The US economic numbers would look much worse and consumer consumption would be much worse if it were not for a very strong replacement of illegal workers by legal workers that is taking place. Because many illegal workers were trying to send money to foreign countries to support families, the consumption effect of illegal employment is very low, and may in fact be overbalanced by consumption of social services. This has some offsets for the US economy, which are preventing more dire numbers at this time.
It is almost certain that the relative impact of replacement of illegal workers with legal workers is providing more impetus to the US economy than the stimulus checks. Also, it will continue for longer. It is not just the replacement of workers, but the effect of removing underbidding for labor. A US worker simply cannot compete by bidding for wages sufficient to support him- or herself along with dependents in this country compared to an individual who is supporting dependents in a country with much lower living costs.
The general business conditions index fell below zero, to -3.2. The new orders index remained close to zero, and the shipments index, while positive, declined markedly. The prices paid index exceeded its earlier record high by a wide margin, reaching 69.6, while the prices received index dipped several points.Expectations by firms were that they would be raising prices considerably more than last year in 2008. Input cost increases were not recovered in the earlier period, and some of that should show up this year. Expectations were for input costs to continue to rise.
Initial Claims, while not dire, are still increasing on a seasonally adjusted (SA) basis. On an NSA basis they continue to decline. The same pattern holds true for continuing claims, which dropped over 123,000 for May 3rd (continuing claims run a week behind initial claims). The level of claims is consistent with recession. To understand the impact, compare May 3rd's continuing claims this year (2,833,473 NSA) to the comparable week in 2007 (2,290,364), or a YoY increase of 23.7%. Needless to say this does not help the economy. It equates to an NSA insured employment increase of 0.4%, which is significant.
One of the weaknesses of measuring insured employment is that after six months unemployed individuals drop off the rolls.
Although May treasury receipts could recover, the deposit pattern for FUT (Federal Unemployment Tax) compared to May 2007 is markedly worse. I did expect to see this, but not quite as emphatically. As we move into the spring and summer months building is at its height and therefore the change in employment indicators should be emphasized for this period.
April G.17: Industrial production dropped 0.7, and the numbers look very similar to February. Of most concern is the 1.1% drop in business equipment. That is a very bad sign, and markedly worse than February. Based on that figure, one might suspect that Q2 GDP will be negative. On a YoY basis, industrial production has managed to climb 0.2%. Hardly strong. The positive subcategories on a YoY basis are business equipment (3.0), materials (1.3), mining (3.1), and utilities (.8). And for April the changes were business equipment (-1.1), materials (-.7), mining (-.8), and utilities (+.3).
Capacity utilization dropped to 79.7. Compare that to the lows for the previous two recessions, which were 78.6 for 91 and 73.6 for 01 (with the bottoms occurring later in those cycles). So the technical economic description of this report should be "piss-poor". April was quite cold, which would have driven up the demand for utilities.
Philly Fed: (the theme is great expectations; note the 2001 pattern)
The effect of the rebate checks on the general economy will probably be muted. I expect utility companies and credit card companies to see better payment patterns and lower delinquencies. I would expect some benefit to the Walmarts of the retailing world, as people who have been avoiding spending on clothing go in and spend on jeans and the like. But consumer psychology is not going to change at these gas and food price levels, so very few will spend most of it in the stores, and continued increases in food and gas prices indicate that the essentials will suck up this money from Washington for the majority of the recipients.
The major story for the US consumer economy over the next six months will be high prices for essentials and much more conservative spending by consumers. Also, the major impact of the home price debacle is due to hit this year. Refinance money usually provides at least a one year cushion for consumer spending, and the restrictions on HELOCs and home equity loans are quite recent. The major tightening on CC standards dates to last fall. Thus we are moving into the period in which 80% of the consumer credit restrictions are due to show up in economic numbers. The Wall Street layoffs are also moving some of the economic impact to a previously immune area with high incomes.
On gas consumption: I have seen estimates of the current drop YoY between 5.8% and 6.0%. However the pattern will accentuate through the year because of the marked drop in construction activity. Also, service businesses aimed at consumers such as home remodeling and lawn maintenance are due to have a tough season. Construction workers drive trucks and transport a lot of materials, so consumption falls should accelerate. The vehicle replacement effect is cumulative over time and will keep building.
One little-discussed aspect of the US economy, especially with respect to employment, is the impact of replacement of illegal workers. I suppose it is simply too politically incorrect to discuss.
The US economic numbers would look much worse and consumer consumption would be much worse if it were not for a very strong replacement of illegal workers by legal workers that is taking place. Because many illegal workers were trying to send money to foreign countries to support families, the consumption effect of illegal employment is very low, and may in fact be overbalanced by consumption of social services. This has some offsets for the US economy, which are preventing more dire numbers at this time.
It is almost certain that the relative impact of replacement of illegal workers with legal workers is providing more impetus to the US economy than the stimulus checks. Also, it will continue for longer. It is not just the replacement of workers, but the effect of removing underbidding for labor. A US worker simply cannot compete by bidding for wages sufficient to support him- or herself along with dependents in this country compared to an individual who is supporting dependents in a country with much lower living costs.
Wednesday, May 14, 2008
The Domestic Story Of The Day Is Polar Bears
Internationally, it's probably the Ashkelon attack. Ms. Rice was taken off to the scene to survey the damage. Israel suspects that the Grad rockets, which are capable of reaching further into Israel, are coming from Iran. In any case, Israel is going to have to go back into Gaza.
But domestically, it's polar bears. They will be named an endangered species, but apparently Interior is changing a few things:
If you love polar bears, don't worry. They'll do fine either way. It's wacky environmentalism that is now the endangered species!
God, I'm tired. Hopefully I'll get back to more blogging tomorrow. I'm sorry for not answering the comments and things. Everyone has their limitations.
Update: The 2007 CO2 case was Mass vs EPA, and the decision is here in pdf.
Further Update: The Anchoress turns her face to the wall and the wife chart, Dust My Broom provides an example of the "clean energy technology" the Sierra Club is advocating, Dr M points out tangentially that the Republicans do not get it, which they don't, and SC&A discovers that some people think environmental problems are the fault of the world-destroying Jews, enabled by the world-destroying Americans.
But domestically, it's polar bears. They will be named an endangered species, but apparently Interior is changing a few things:
In making the announcement, Kempthorne said, “I am also announcing that this listing decision will be accompanied by administrative guidance and a rule that defines the scope of impact my decision will have, in order to protect the polar bear while limiting the unintended harm to the society and economy of the United States.”And let the lawsuits begin! Hall's three page letter ruling out greenhouse gas emissions as an issue requiring consultation is here. The Sierra Club is correct in pointing out that allowing this to stand would greatly weaken ESA, so I think it's back to court:
...
“Listing the polar bear as threatened can reduce avoidable losses of polar bears. But it should not open the door to use of the ESA to regulate greenhouse gas emissions from automobiles, power plants, and other sources,” said Kempthorne. “That would be a wholly inappropriate use of the ESA law. The ESA is not the right tool to set U.S. climate policy.”
...
To make sure the ESA is not misused to regulate global climate change, Kempthorne promised the following actions:
* The U.S. Fish and Wildlife Service is proposing a 4(d) rule that states that if an activity is permissible under the stricter standards of the Marine Mammal Protection Act, it is also permissible under the ESA with respect to the polar bear. This rule, effective immediately, will ensure the protection of the bear while allowing us to continue to develop our natural resources in the arctic region in an environmentally sound way.
* Director Hall will issue guidance to staff that the best scientific data available today cannot make a causal connection between harm to listed species or their habitats and greenhouse gas emissions from a specific facility, or resource development project or government action.
* The Department will issue a Solicitor’s Opinion further clarifying these points.
* The Department will propose common sense modifications to the existing ESA regulatory language to prevent abuse of this listing to erect a back-door climate policy outside our normal system of political accountability.
“The Bush administration’s sham plan also proposes changes that could gut the Endangered Species Act and prevent it from ever being used to actually protect the polar bear or address global warming—which is precisely what is pushing the bear toward extinction.This will be the issue that eventually breaks the back of the extreme wingers in the environmental movement by forcing Congress to impose some common sense limitations to the ability to sue forever. Because the wingers now have the law on their side; they will win in court on the basis of the SC's ruling about CO2. All of that work would be wasted if this interpretation sticks, so it's all of the non-rich population of the US against the wingers now. There are more non-rich US citizens than wingers.
“We don’t need to sacrifice polar bears and other wildlife just so Big Oil can add to their tens of billions in record profits. America already has the technology and the will to embrace a clean energy economy that will end our dangerous dependence on oil, fight global warming, and leave wild, pristine places like the Arctic intact.
If you love polar bears, don't worry. They'll do fine either way. It's wacky environmentalism that is now the endangered species!
God, I'm tired. Hopefully I'll get back to more blogging tomorrow. I'm sorry for not answering the comments and things. Everyone has their limitations.
Update: The 2007 CO2 case was Mass vs EPA, and the decision is here in pdf.
Further Update: The Anchoress turns her face to the wall and the wife chart, Dust My Broom provides an example of the "clean energy technology" the Sierra Club is advocating, Dr M points out tangentially that the Republicans do not get it, which they don't, and SC&A discovers that some people think environmental problems are the fault of the world-destroying Jews, enabled by the world-destroying Americans.
Tuesday, May 13, 2008
Retail & ECB Bank Lending
Advance retail clocked an overall decline of 0.2% from March to April and an annual increase of 2.0%. On an annual basis that is well below the inflation rate.
Overall spending on gas dropped, even though gas prices increased. The pinch is really hitting now.
On an annual basis, some selected figures:
Motor vehicle dealers: -8.0%
Groceries: +6.1%
Gasoline: +16.3%
According to the ECB lending survey, banks plan to tighten business and household credit by the highest margins in 5 years (the length of the survey). The four future questions showed tightening quite similar to 2003, a year in which GDP in the core EU countries grew at less than 0.5%. So one would say that the European slowdown is underway.
The consumer outlier was purchase money mortgages, for which 32% of respondents intended to tighten. This is significantly higher than the previous height of 25% recorded in January 2004.
The business outlier was loans to large enterprises. 54% of respondents expected to tighten in the next quarter, whereas only 33% expected to tighten for small to medium enterprises. Short term lending was less affected, with only 33% expecting to tighten, whereas 53% of respondents intended to tighten long term.
There is a steep 3-quarter rise in tightening shown for all categories of lending. The trajectory for long term business loans beginning Jan 2007 through April 2008:
In 2003 the tightening bias was easing throughout the year. I would say that Europe will be in recession by the end of this year. Inflation does have some masking effect there as well as in the US, but these are intimidating numbers.
Overall spending on gas dropped, even though gas prices increased. The pinch is really hitting now.
On an annual basis, some selected figures:
Motor vehicle dealers: -8.0%
Groceries: +6.1%
Gasoline: +16.3%
According to the ECB lending survey, banks plan to tighten business and household credit by the highest margins in 5 years (the length of the survey). The four future questions showed tightening quite similar to 2003, a year in which GDP in the core EU countries grew at less than 0.5%. So one would say that the European slowdown is underway.
The consumer outlier was purchase money mortgages, for which 32% of respondents intended to tighten. This is significantly higher than the previous height of 25% recorded in January 2004.
The business outlier was loans to large enterprises. 54% of respondents expected to tighten in the next quarter, whereas only 33% expected to tighten for small to medium enterprises. Short term lending was less affected, with only 33% expecting to tighten, whereas 53% of respondents intended to tighten long term.
There is a steep 3-quarter rise in tightening shown for all categories of lending. The trajectory for long term business loans beginning Jan 2007 through April 2008:
Jan 07: 3%That is going to show up in the economy, no ifs, ands or buts. The percentage of respondents tightening short term business credit increased 10% points between January and April. In general European companies tend to be more dependent on bank lending than US companies.
Apr 07: 8%
Jul 07: 10%
Oct 07: 34%
Jan 08: 35%
Apr 08: 53%
In 2003 the tightening bias was easing throughout the year. I would say that Europe will be in recession by the end of this year. Inflation does have some masking effect there as well as in the US, but these are intimidating numbers.
Monday, May 12, 2008
Consider It Kenneth Fisherism In Action
WSJ has this story charting the progress of a California family now going into Chapter 7. They will lose their home, of course. They owe more than $500,000 on that home and they have five kids. He's a truck driver and she's a clerk. They also have more than $100,000 of other debt. According to the article the BK total is $670,000 including CC, auto, etc.
Act 1: In 1995 they buy a house for $170,000. The downpayment is $11,000. Even figuring high closing costs, they couldn't have started out with a balance over $165,000. So, they must have pulled out somewhere around $340,000 on that house in twelve years to get to their current mortgage balance. That's over $28,000 a year.
Act 2: In 1999 he had a knee operation and was out of work for six months. They ended up filing bankruptcy and made payments for a couple of years. Needless to say, that was rough (they really don't allow you much to live on). I'm guessing that was the motive for...
Act 3: The 2001 refi. I'm sure they pulled cash out, plus financed some hefty fees. Obviously it was a high interest mortgage, because they must have been in BK at the time. Maybe they paid off the rest of their creditors. It must have felt good, and so set the stage for
Act 4: In 2003 they refinanced. I'm sure they rolled everything in. Needless to say the mortgage was probably more than they could really pay then, and so I'm sure they charged up some stuff, leading to
Act 5: In 2005 she was pregnant and went part-time, and they refinanced:
They didn't have the income to pay this mortgage in 2005, either. But of course Option One did not care, because it looked like they had plenty of equity margin. Option One knew this couple was going to lose the home sooner or later. Option One just didn't think Option One would be taking a loss on it when they did lose it.
FWIW, the 2005 appraisal is suspect. However they probably could have sold it then for about $550,000, and walked away after costs with more than the cash they got out then. They probably had at least $90,000 equity, and they might have been able to exit with 50K to pay all their bills. They would have been way ahead, aside from the rent-free feature of CA RE nowadays. You can pretty much count on getting 8 months free.
So why was this couple even thinking they had a chance to keep the house? This is the quote that got to me:
You don't want to pay your debt when you have $670,000 of it, less than 80K in annual income, and 5 kids. Obviously that is not this couple truly desires. They want to feed, clothe and raise their kids in an intact family, plus to stay in this house. Which is not going to happen, because the current value of the home is far above what this family can afford to pay on a mortgage. No lender is going to write the loan down more than it would cost to foreclose. The lender should come out at least $150,000 ahead by foreclosing, so that's what is going to happen.
There appear to be so many darned people who lived off their houses in the bubble markets and got themselves in trouble like this.
This is why I got so mad about Kenneth Fisher's screed claiming that subprime lenders were doing a wonderful thing:
Subprime lending is only moral and good if it stops at the point at which the borrowers have a reasonable chance of paying off their loans. Beyond that, it's just predatory lending.
I don't believe that Congress or any agency should be in any way paying off lenders like this. They need to be driven out of business. I cannot say that this couple was faultless - they would have lost their home far earlier if they hadn't been given all this credit - but I will say that although they are obviously economic doofuses and subprime as subprime gets, it was still not moral or good to load them up with debt past the point at which they could emerge from the situation.
The endpoint for this family is that now they cannot find a rental and the family will be split up. That is what Kenneth Fisherism has created.
There are many similar cases. I find it unutterably tragic that people who could not afford to remain in their homes but did have significant equity essentially had that equity siphoned off by the loan industry. There comes a point for many people when they need to let go of the house and walk with the equity they have. That nest egg helps them find a rental, keep reasonable credit, and continue their lives.
Act 1: In 1995 they buy a house for $170,000. The downpayment is $11,000. Even figuring high closing costs, they couldn't have started out with a balance over $165,000. So, they must have pulled out somewhere around $340,000 on that house in twelve years to get to their current mortgage balance. That's over $28,000 a year.
Act 2: In 1999 he had a knee operation and was out of work for six months. They ended up filing bankruptcy and made payments for a couple of years. Needless to say, that was rough (they really don't allow you much to live on). I'm guessing that was the motive for...
Act 3: The 2001 refi. I'm sure they pulled cash out, plus financed some hefty fees. Obviously it was a high interest mortgage, because they must have been in BK at the time. Maybe they paid off the rest of their creditors. It must have felt good, and so set the stage for
Act 4: In 2003 they refinanced. I'm sure they rolled everything in. Needless to say the mortgage was probably more than they could really pay then, and so I'm sure they charged up some stuff, leading to
Act 5: In 2005 she was pregnant and went part-time, and they refinanced:
At the time, their house was appraised at $610,000. They took out a $505,000 loan -- roughly $452,000 went to pay off their prior loan, about $15,600 went to other outstanding debts and fees and the Floyds took out almost $23,000 in cash.Before the last refi, in ten years they had managed to build up their mortgage balance to the tune of at least $290,000. It looks like they tried again in 2007, but no dice. They stopped paying the mortgage in April 2007, and the house is set to be sold in May 2008. Here is where this gets quite bizarre.
By December, the Floyds monthly payments, including back payment fees, reached $5,600. Mrs. Floyd has since asked Option One for loan modification. The couple also contacted Hope Now, a coalition of mortgage companies, investors and credit counselors. But the group said that they couldn't help the Floyds because they'd missed too many months of payments.Yeah, and they don't have the income to pay a bleeping 500K mortgage! The interest rate is not their real problem. If they were paying IO on this at 7% (prime I-O) their mortgage payment would be over $35,000, plus taxes and insurance. Their joint incomes probably aren't more than 80K, and they have 5 kids, so that makes it effectively 70K max. Hoo-hah.
They didn't have the income to pay this mortgage in 2005, either. But of course Option One did not care, because it looked like they had plenty of equity margin. Option One knew this couple was going to lose the home sooner or later. Option One just didn't think Option One would be taking a loss on it when they did lose it.
FWIW, the 2005 appraisal is suspect. However they probably could have sold it then for about $550,000, and walked away after costs with more than the cash they got out then. They probably had at least $90,000 equity, and they might have been able to exit with 50K to pay all their bills. They would have been way ahead, aside from the rent-free feature of CA RE nowadays. You can pretty much count on getting 8 months free.
So why was this couple even thinking they had a chance to keep the house? This is the quote that got to me:
"I want to pay my debt. I pay my federal and state taxes like I'm supposed to, I go to work, and I just can't find any help," said Ms. Floyd. "It just isn't fair."It isn't fair? This couple really can't afford a mortgage over 240K, and 210K would be a lot more achievable. To return these people to the ability to pay their mortgage, they need to be bailed out to the tune of 50%. After that Hope Now would probably have to hire a Vinnie to follow them around and break their fingers if they tried to use their credit cards or buy a new car. I don't even know how to express what I am thinking.
You don't want to pay your debt when you have $670,000 of it, less than 80K in annual income, and 5 kids. Obviously that is not this couple truly desires. They want to feed, clothe and raise their kids in an intact family, plus to stay in this house. Which is not going to happen, because the current value of the home is far above what this family can afford to pay on a mortgage. No lender is going to write the loan down more than it would cost to foreclose. The lender should come out at least $150,000 ahead by foreclosing, so that's what is going to happen.
There appear to be so many darned people who lived off their houses in the bubble markets and got themselves in trouble like this.
This is why I got so mad about Kenneth Fisher's screed claiming that subprime lenders were doing a wonderful thing:
If you look at the history of subprime loans, they tend to average about a ten percent default rate. Now we're up around 14 percent. So all this brouhaha is about the increase from that historic ten percent default rate to today's rate of 14 percent.It's not moving into a home that improves a family's position. It's being able to live there long-term. Most subprime loans out there are really refis, and the current default rate on 2/28s seems to be about at 50% for some portfolios.
But a ten percent default rate means that 90 percent of the people who got these loans ended up owning homes that they wouldn't otherwise have been able to buy. The question is: Do we want more people to have homes or do we want fewer people to have homes? My view is more people owning homes is moral and good. Fewer people owning homes is immoral and bad.
We should be encouraging subprime loans. Because it's the way these people get homes.
Subprime lending is only moral and good if it stops at the point at which the borrowers have a reasonable chance of paying off their loans. Beyond that, it's just predatory lending.
I don't believe that Congress or any agency should be in any way paying off lenders like this. They need to be driven out of business. I cannot say that this couple was faultless - they would have lost their home far earlier if they hadn't been given all this credit - but I will say that although they are obviously economic doofuses and subprime as subprime gets, it was still not moral or good to load them up with debt past the point at which they could emerge from the situation.
The endpoint for this family is that now they cannot find a rental and the family will be split up. That is what Kenneth Fisherism has created.
There are many similar cases. I find it unutterably tragic that people who could not afford to remain in their homes but did have significant equity essentially had that equity siphoned off by the loan industry. There comes a point for many people when they need to let go of the house and walk with the equity they have. That nest egg helps them find a rental, keep reasonable credit, and continue their lives.
The Obligation
The transcript of Obama's speech in WV was interesting. The topic was veterans, and most of it was the type of thing which any politician must say, whether he or she believes it or not (I do not mean to imply that Obama does not believe what he said). Almost nobody in public life quarrels with most of this stuff:
I read McCain's carbon speech. I'm really not sure that he understands the difference between pollution and carbon dioxide emissions; I know he's got the science wrong; I know he's playing with fire with the idea of carbon cap trading systems. He seemed to be waffling a bit on nuclear energy. It seems to me that there is little meaningful difference between his plans and Obama's, and no need to worry about Mrs. Also-Ran's plans any more.
We aren't going to get a meaningful choice on some of the most important political issues of our times in this presidential race, and that's a pity. The same is true of immigration, etc. Everything seems dominated by the current political CW, and I fear that CW will turn out to be just as facile and ultimately destructive as the theory that handing out mortgages like popcorn would lead to widespread prosperity.
So how much change will Mr. Change be bringing to DC? If he shares essentially the same positions as this very long-time Washington insider, where is the change? Just asking.
The brave Americans who fight today believe deeply in this country. And no matter how many you meet, or how many stories of heroism you hear, every encounter reminds that they are truly special. That through their service, they are living out the ideals that stir so many of us as Americas – pride, duty, and sacrifice.There was one point at which my eyes opened quite wide:
Some of the most inspiring are those you meet at places like Walter Reed Army Medical Center. They are young men and women who may have lost a limb or even their ability to take care of themselves, but they will never lose the pride they feel for their country. They’re not interested in self-pity, but yearn to move forward with their lives. And it’s this classically American optimism that makes you realize the quality of person we have serving in the United States Armed Forces.
This, after all, is what led them to wear the uniform in the first place – their unwavering belief in the idea of America. The idea that no matter where you come from, or what you look like, or who your parents are, this is a place where anything is possible; where anyone can make it; where we look out for each other, and take care of each other; where we rise and fall as one nation – as one people. It’s an idea that’s worth fighting for – an idea for which so many Americans have given that last full measure of devotion.
When our troops go into battle, they serve no faction or party; they represent no race or region. They are simply Americans. They serve and fight and bleed together out of loyalty not just to a place on a map or a certain kind of people, but to a set of ideals that we have been striving for since the first shots rang out at Lexington and Concord – the idea that America could be governed not by men, but by laws; that we could be equal in the eyes of those laws; that we could be free to say what we want and write what want and worship as we please; that we could have the right to pursue our individual dreams but the obligation to help our fellow citizens pursue theirs.Actually, the obligation to help our fellow citizens pursue their dreams was never part of the deal. By their nature dreams are often grandiose and uncertain, and vary widely. A lot about the social freedom to go your own way involves letting other people go their own ways.
I read McCain's carbon speech. I'm really not sure that he understands the difference between pollution and carbon dioxide emissions; I know he's got the science wrong; I know he's playing with fire with the idea of carbon cap trading systems. He seemed to be waffling a bit on nuclear energy. It seems to me that there is little meaningful difference between his plans and Obama's, and no need to worry about Mrs. Also-Ran's plans any more.
We aren't going to get a meaningful choice on some of the most important political issues of our times in this presidential race, and that's a pity. The same is true of immigration, etc. Everything seems dominated by the current political CW, and I fear that CW will turn out to be just as facile and ultimately destructive as the theory that handing out mortgages like popcorn would lead to widespread prosperity.
So how much change will Mr. Change be bringing to DC? If he shares essentially the same positions as this very long-time Washington insider, where is the change? Just asking.
Very Expensive Myths
There was recently a meltdown in arctic ice, but the arctic ice expanse is right back this year. (For what is really happening, go to this blog post.) There, is in fact, no evidence that the world is getting warmer, and considerable evidence that the short-term trend is one of cooling. But truth moves slowly at federal levels, and in DC the Arctic icecap is almost gone, taking the polar bears with it. One is tempted to suggest that we should ask the Canadian government to give them up, because when Canada ruled on the status of the polar bears it said there were plenty.
It may or may not surprise us all that a shift in sunspot cycles has occurred and now we are getting cooler. That is the historical correlation; if you graph sunspot cycles by intensity and length, when the cycles get low and slow, the earth cools. We are now in the extended interim between cycle 23 and 24. 23 keeps hanging around; 24 has popped a few sunspots but can't seem to get going, and we're chilly. We are so chilly that a big chunk of planned US corn may not have been planted due to conditions in the upper midwest. Timing is important on corn.
In any case, while only Al is left looping the world in his jet, making speeches with frenetic arm motions bewailing the demise of the polar bears, an environmentalist group has gone to court to make the Interior Dept declare the polar bear threatened by global warming. That would make it a matter of federal law that CO2 emissions directly threaten the polar bear.
They don't, of course, because the polar bear has been around during periods with temperatures significantly warmer than ours. But facts no longer matter.
I'm hoping that the inevitable happens, because all our energy decisions are now controlled by courts and leftist environmental nutcases. This will not end until the population rebells, and REBELLION IS ON THE WAY!
Here's an article in an Alaskan paper regarding the judge's order. The way this works is that since the Supreme Court ruled that CO2 is a pollutant, if the polar bear is endangered, and if the polar bear is endangered because of global warming, then almost any type of energy project or any project using energy can be blocked.
Also, the law mandates all federal agencies not to do anything that harms the environment of endangered species. This will have many interesting results, because almost anything emits CO2. Did you know that making concrete emits a great deal of CO2 into the atmosphere?
I have been laughing for days about this. Consider what might have happened if polar bears had been ruled endangered and the SC had ruled CO2 a pollutant, oh, say ten years ago:
The FEMA caravan for relief of a drowned New Orleans after Katrina would have been awesome. The bicycle convoy would have extended for hundreds of miles, and we'd all have had a great deal of time to cheer it as it went through our communities. I'm sure the first shipments of medical supplies and water would have reached the people in slightly under 3 weeks.
This is real, and hilarious.
It may or may not surprise us all that a shift in sunspot cycles has occurred and now we are getting cooler. That is the historical correlation; if you graph sunspot cycles by intensity and length, when the cycles get low and slow, the earth cools. We are now in the extended interim between cycle 23 and 24. 23 keeps hanging around; 24 has popped a few sunspots but can't seem to get going, and we're chilly. We are so chilly that a big chunk of planned US corn may not have been planted due to conditions in the upper midwest. Timing is important on corn.
In any case, while only Al is left looping the world in his jet, making speeches with frenetic arm motions bewailing the demise of the polar bears, an environmentalist group has gone to court to make the Interior Dept declare the polar bear threatened by global warming. That would make it a matter of federal law that CO2 emissions directly threaten the polar bear.
They don't, of course, because the polar bear has been around during periods with temperatures significantly warmer than ours. But facts no longer matter.
I'm hoping that the inevitable happens, because all our energy decisions are now controlled by courts and leftist environmental nutcases. This will not end until the population rebells, and REBELLION IS ON THE WAY!
Here's an article in an Alaskan paper regarding the judge's order. The way this works is that since the Supreme Court ruled that CO2 is a pollutant, if the polar bear is endangered, and if the polar bear is endangered because of global warming, then almost any type of energy project or any project using energy can be blocked.
Also, the law mandates all federal agencies not to do anything that harms the environment of endangered species. This will have many interesting results, because almost anything emits CO2. Did you know that making concrete emits a great deal of CO2 into the atmosphere?
I have been laughing for days about this. Consider what might have happened if polar bears had been ruled endangered and the SC had ruled CO2 a pollutant, oh, say ten years ago:
The FEMA caravan for relief of a drowned New Orleans after Katrina would have been awesome. The bicycle convoy would have extended for hundreds of miles, and we'd all have had a great deal of time to cheer it as it went through our communities. I'm sure the first shipments of medical supplies and water would have reached the people in slightly under 3 weeks.
This is real, and hilarious.
Sunday, May 11, 2008
Happy Mother's Day!!
(To all the mothers out there.)
I do believe that I've got to mow the lawn, so don't expect much from me today.
I do believe that I've got to mow the lawn, so don't expect much from me today.
Saturday, May 10, 2008
The Real Mortgage News
MGIC significantly tightens its criteria for mortgage insurance. The latest changes go into effect June 1st. The March changes became obsolete quite quickly, didn't they?
First, the entire states of New Jersey, Kentucky and Michigan go on the declining list (MGIC calls it restricted). Congratulations to the lucky winners!!! We know you worked hard for that honor....
Jumbos get hard hit. Max $ insurable amount is $650,000 or GSE buy. In a restricted market, max CLTV is 85%, whereas it is 90% in an unrestricted market. Min FICO for all markets is 700.
General: No cash-outs, no 3-4 units, no non-warrantable condos, no condotels, it looks like no EAs, no low-docs, no low-doc Alt-As, no option-ARMs. Min 5% dp, min 3% borrower funds on a purchase. No non-owner occupied. <720 requires two months PITI reserves.
If the appraiser describes the market as declining, the loan automatically goes into the restricted bucket. Also DU declining, or lender-identified declining. In other words, if the underwriter or appraiser IDs it as declining then MGIC IDs it as restricted. This is important, because it is unlimited, and because the lender cannot ignore the matter. If the loan ever defaulted and the lender hadn't used the right category, MGIC could and would refuse to pay.
The new restricted list (which automatically expands whenever a particular lender expands their own list) is here, and now contains either portions or the entire area of 30 (thirty) states.
The much-coveted distinction of having your entire state be restricted is still for a select few:
And do you receive for having made the list? There's a surcharge for your MI. DC is unaccountably not included in the surcharge list, possibly because it might irritate too many Congress Critters and/or their favorite prostitutes.
After looking at the list, I'd say that MGIC might write insurance for maybe 40-50 90% CLTV jumbos in the second half of 2008. Everything else will be at 85%.
You need a 680 credit score for a purchase or refi in restricted markets (700 for jumbo). There's an across-the-board surcharge of 10 bps for rate/term refis as of June. MGIC will no longer write any insurance for condos or attached housing in Florida.
Barney Frank was threatening lenders last week because jumbo rates were still so high; he'd better start threatening mortgage insurance companies. As it is these guidelines are still too lax in some markets. Sure, you get a $105,000 downpayment on that $700,000 home, but when it winds up defaulting in 2010 and selling for $450,000, that's a nasty loss. Hard to make a profit this way, and FICOs aren't going to help.
First, the entire states of New Jersey, Kentucky and Michigan go on the declining list (MGIC calls it restricted). Congratulations to the lucky winners!!! We know you worked hard for that honor....
Jumbos get hard hit. Max $ insurable amount is $650,000 or GSE buy. In a restricted market, max CLTV is 85%, whereas it is 90% in an unrestricted market. Min FICO for all markets is 700.
General: No cash-outs, no 3-4 units, no non-warrantable condos, no condotels, it looks like no EAs, no low-docs, no low-doc Alt-As, no option-ARMs. Min 5% dp, min 3% borrower funds on a purchase. No non-owner occupied. <720 requires two months PITI reserves.
If the appraiser describes the market as declining, the loan automatically goes into the restricted bucket. Also DU declining, or lender-identified declining. In other words, if the underwriter or appraiser IDs it as declining then MGIC IDs it as restricted. This is important, because it is unlimited, and because the lender cannot ignore the matter. If the loan ever defaulted and the lender hadn't used the right category, MGIC could and would refuse to pay.
The new restricted list (which automatically expands whenever a particular lender expands their own list) is here, and now contains either portions or the entire area of 30 (thirty) states.
The much-coveted distinction of having your entire state be restricted is still for a select few:
ArizonaOkay, okay, GA is not on that list. However, if you look at the MSA and county details, you'll see that GA is pulling long and strong, as are states like VA. So those of you who have won the laurel crown can not afford to rest easy on your laurels. We're right on your heels.
California,
DC,
Florida,
Kentucky,
Michigan
Nevada
New Jersey
And do you receive for having made the list? There's a surcharge for your MI. DC is unaccountably not included in the surcharge list, possibly because it might irritate too many Congress Critters and/or their favorite prostitutes.
After looking at the list, I'd say that MGIC might write insurance for maybe 40-50 90% CLTV jumbos in the second half of 2008. Everything else will be at 85%.
You need a 680 credit score for a purchase or refi in restricted markets (700 for jumbo). There's an across-the-board surcharge of 10 bps for rate/term refis as of June. MGIC will no longer write any insurance for condos or attached housing in Florida.
Barney Frank was threatening lenders last week because jumbo rates were still so high; he'd better start threatening mortgage insurance companies. As it is these guidelines are still too lax in some markets. Sure, you get a $105,000 downpayment on that $700,000 home, but when it winds up defaulting in 2010 and selling for $450,000, that's a nasty loss. Hard to make a profit this way, and FICOs aren't going to help.
Friday, May 09, 2008
A Pretty Good Column On Inflation
Sesit at Bloomberg, explaining why monetary policy won't affect food and fuel inflation very much.
The one main contribution to the pot left out for fuel is that many of the Asian economies with rapidly growing demand subsidize fuel costs substantially. This keeps fuel price-insensitive for a time.
The other factor involving food inflation not discussed are biofuels, which are driving up food costs by draining ag capacity to produce fuels from relatively energy-thin base materials (the exception being palm oil).
Eventually it will break, but the probability is that the near-term break will occur when various countries have to cut back on their fuel subsidies due to rising budget deficits. In India's case, the cost of the subsidy is hidden in the form of bonds issued by the fuel companies to cover their operating losses. These bonds are backed by the government. In countries such as Indonesia, the subsidy is paid from the government budget.
As background I suggest this 2005 Asia Times article reviewing the situation in Singapore, Malaysia, Indonesia and Thailand. The situation has already forced some changes in govenrment.
In the last week the current Indonesian president announced that Indonesia would be raising fuel prices:
Now consider the impact on all those who consume products exported from Indonesia. Some of that additional inflation will transfer through via the products. The Indonesian government is still hoping for about 6% GDP growth in 2008, but the vectors indicate slackening growth to be sure.
As consumers absorb the impact of these increases, they will, like US consumers, have to cut back on discretionary spending.
Malaysia is reviewing its fuel subsidies and says it expects to make a change by 2009. Among other measures, the government is trying to figure out how to stop subsidizing foreigners. Singapore does not subsidize fuel substantially, but then it can afford not to. Average percentages of income spent on food:
As inflation in the region moves steadily upward (averaging well over 7% so far), it is a fallacy to think that we won't see it abroad. Thus the near-term global future is for higher inflation transmitted in bumps and starts. Global growth is pressured downwards as a result.
The one main contribution to the pot left out for fuel is that many of the Asian economies with rapidly growing demand subsidize fuel costs substantially. This keeps fuel price-insensitive for a time.
The other factor involving food inflation not discussed are biofuels, which are driving up food costs by draining ag capacity to produce fuels from relatively energy-thin base materials (the exception being palm oil).
Eventually it will break, but the probability is that the near-term break will occur when various countries have to cut back on their fuel subsidies due to rising budget deficits. In India's case, the cost of the subsidy is hidden in the form of bonds issued by the fuel companies to cover their operating losses. These bonds are backed by the government. In countries such as Indonesia, the subsidy is paid from the government budget.
As background I suggest this 2005 Asia Times article reviewing the situation in Singapore, Malaysia, Indonesia and Thailand. The situation has already forced some changes in govenrment.
In the last week the current Indonesian president announced that Indonesia would be raising fuel prices:
Officials have yet to say how large the price rise will be, but President Susilo Bambang Yudhoyono has said his advisers were talking about a 20 to 30 percent hike.Indonesia's economic growth is expected to slow as a result, of course, but the alternative is an even worse hit to the economy. The reason is that the amount of the subsidies had gotten so high that Indonesia's currency, the rupiah, was beginning to lose value as money left, which of course raises the cost of all of their imports.
...
Budget committee chairman Haris Azhar Azis said the fuel price hike was necessary to prevent even greater damage to the economy in future.
"With a 30 percent rise, inflation may jump from the government's target of 6.5 percent to 11.1 percent this year. But if we do not do anything it may reach 13.2 percent," Azis was quoted by AFP as saying.
The subsidies have become increasingly expensive as the price of oil has surged, and are projected to nearly triple this year to 126.8 trillion rupiah (13.8 billion dollars).So the government has no option. To maintain growth it has to cut the money spent on subsidies.
That amounts to about 12 percent of the state budget, based on a revised oil price of 95 dollars per barrel -- although black gold hit nearly 124 dollars on Thursday.
Now consider the impact on all those who consume products exported from Indonesia. Some of that additional inflation will transfer through via the products. The Indonesian government is still hoping for about 6% GDP growth in 2008, but the vectors indicate slackening growth to be sure.
As consumers absorb the impact of these increases, they will, like US consumers, have to cut back on discretionary spending.
Malaysia is reviewing its fuel subsidies and says it expects to make a change by 2009. Among other measures, the government is trying to figure out how to stop subsidizing foreigners. Singapore does not subsidize fuel substantially, but then it can afford not to. Average percentages of income spent on food:
Singapore: 8%Needless to say rising food prices are adding more pressures in many of these countries. The heavy subsidizers with growing consumer sectors are going to have to figure out how to target their subsidies more efficiently.
Malaysia: 15%
Indonesia: 26%
Thailand: 26%
China: ~28% (hard to get good figures)
India: 33%
Vietnam: 40%
Pakistan: 40%.
As inflation in the region moves steadily upward (averaging well over 7% so far), it is a fallacy to think that we won't see it abroad. Thus the near-term global future is for higher inflation transmitted in bumps and starts. Global growth is pressured downwards as a result.
Thursday, May 08, 2008
Politics: Bye Bye Hillary
I do not know who I think should be president out of the top three, but I do know that Hillary has convinced me that she should not be.
What an amazingly classless exit.
What an amazingly classless exit.
Unemployment Not Too Bad
NSA continuing claims have been dropping for three weeks, and SA initial and continuing claims dropped this last week. SA insured employment has risen to 2.3%, but NSA holds steady at 2.2%. The levels are still consonant with a recession but not with a deepening recession.
Undoubtedly the larger proportion of older workers is helping a bit - as people retire it lessens unemployment. Also all the anecdotes about illegal workers leaving (which are backed up by some real data) are probably helping the numbers.
Undoubtedly the larger proportion of older workers is helping a bit - as people retire it lessens unemployment. Also all the anecdotes about illegal workers leaving (which are backed up by some real data) are probably helping the numbers.
